tv [untitled] August 26, 2013 10:30am-11:01am PDT
presentation that i think would maybe be helpful to the commission, we look to this program to accomplish a lot of goals. maybe the frame -- your presentation to where what is the status of certain of the goals. we wanted a green power purchasing program and we wanted this program because of the ideas around greenhouse gas emission reductions to the city's greenhouse gas emission reduction goals and the 100% renewable energy goals that -- by the city and county and that we're charged with giving life to. but really what it was about was the local generation. so, if you can tell us where it's at because i know it's gone up and down. what is the status of in-city renewable generation and what is the status of jobs? >> okay. >> that would be real helpful i think to move us forward because we're going to go all over when really we want to know where is it the stuff that really excited us sitting here today. and thinking back, i guess one
of the big reveals you're looking at doing a change to the program, you're investigating to do work in which shell buys the hydro power. i'm guessing that's going to impact the potential or potential not of rate setting next week. or is that something you're going to have answered to the satisfaction of the commissioners at the sfpuc? >> i don't expect that we will have any kind of confirmation from shell about specific resources by then. what i can say is that our goal is to have a portfolio with shell where every resource from which they purchase power is greenhouse gas free, california produced, and with unionized maintenance. >> okay, thanks. so, if you can walk us through the renewable character in city. we had at the last discussion policy committee, we talked about recs and what that does or doesn't do to some of the other goals and the jobs piece, if you can move us forward with that. >> yes.
and just quickly, there are sort of three aspects to this program design that we've been trying to balance in response to concerns about public officials. one is affordability. there were a lot of concerns about a 14.57 [speaker not understood] when i came in april. we're aware that everybody wants the greenest product with the highest quality products. and that we need to have resources for local bills, which is what you're just referring to for buying and purchasing renewable energy steps produced in the city. and for energy efficiency projects. so, going on to the next slide, a few things have changed in our favor since the board of supervisors' vote in 2012. prices for renewable products have fallen.
pg&e has proposed a green tariff before the california puc which has put a little pressure on us to be more competitive. and the market has evolved in ways that support more -- i wanted to give you thises as a backdrop for a discussion on the buildout, for example. green energy authority is now providing all of marin county's energy to any customer, commercial or residential, that has not had a bid out and also to the city of richmond. it's got 60 megawatts of renewable projects in some stage of development. and it's planning more growth. it's doing very well. since clean power sf issued an rfp for the -- a shell type contract and got no clarified bidderses, sonoma county got 11 qualified bidders. what is happening out there in terms of techs and providers we
can all get as ccas, and then we just had a workshop. clean power sf and cca industry association sponsored a workshop for government, government officials, thinking about looking at ccas in their own communities. and we got more than a dozen jurisdictions to show up, several wishing they could come, but weren't able to send anyone. there is a lot more interest these days. i want you to see that, if you go to the next slide, that pg&e's estimated rate for 2014 is 9 cents a kilowatt hour. they just filed with the california puc for a rate
increase. pg&e's green tariff option as estimated by pg&e and the press would be about 11-1/2 cents. if you add the penny to the base rate expected in january for pg&e, you would get a 12.5 cent green rate for its proposed tariff. we think if we launched today with the information that we have about shell and hetch hetchy power we could have a rate of less than -- less than 11 cents per share and probably less than 10 cents. i have a slide called water recs, but i'm not going to go through because i understand ed randolph is here from the california puc. he's an expert on the state's renewable portfolio standards and will do a much better job
than i will explaining that to you. and now, commissioner arce, getting to your question about build outs, when i joined in april, local power had just finished its report to the sfpuc on a business model for this program which included a very aggressive, very aggressive approach to buildout. and that contract ended in march. since i've been there, i've tried to identify components of that work that we think are practical and doable and low-risk for the city, and we have incorporated some elements of those recommendations into our own program planning.
i spent many hours with our stakeholder groups trying to get their input about how we can, again, design a buildout program that's realistic and as aggressive as we can be without imposing a lot of risk on the city. and i've gotten a lot of good ideas from them. i've given them a 20-page draft of an outline of a bunch of buildout strategies. >> what's the number from the draft of the outline? maybe for everybody to know, what's the number of in-city solar, in-city cogeneration -- >> there's no numbers in it. first of all, my constraint is that in the first two years i'm only going to have about $8 million to dedicate to buildout of energy efficiency projects. and we haven't gotten to that
level of detail in our own planning. although we do have a report coming in from some consultants that will identify >> lot of solar -- a lot of solar sites in the city and on city properties, and that will help us with our planning ~. >> that's coming to the sfpuc before tuesday? >> i don't know if i can form a final document by tuesday, no. no. >> so, we don't have a number on the in-city renewables -- >> no. >> is that because of the challenges around the rates and looking at the renewable energy credits around options as rates? is that kind of driving that function? >> yes. so, for example, if the city were to purchase a portfolio from shell that was 25% bundled renewable product and the remaining hydro or other power
with recs attached to that production, we would probably have about $2 million a year in revenues that would come at a 10-1/2 cent rate or 10 cent rate. again, that would depend on how much hetch hetchy power we could purchase and some other things. it's fairly hard at this point to estimate megawatts of production in the city when we don't have a rate. we don't have guidance from our commission about how to proceed in terms of the revenue we'll have for a build out. it's also a big undertaking. right now we have very limited staff until we actually have a program. i do have some funds that were allocated from the board of supervisors to conduct some studies. >> when would that happen? >> again --
>> conducting the studies, yeah. >> well, i don't know. i'm waiting for the commission to say go ahead and launch the program. and then we'll be doing a lot of more detailed planning. >> thanks. commissioner josefowitz. >> i was wondering why -- what's different about sonoma that it got 11 people bidding on its program. >> we think what's different is that the market's changed in the last three or four years so that there are more accredited potential providers. i think that's what we assume. >> all right. if you want to continue, and we were just finishing the draft outline on the in-city. except we have a question from commissioner juan. >> it might be a very naive
question. so, the reason why the staff will propose the increase to the rec is to reduce the customer rate, is that the only reason even though it doesn't follow the regional goal of the green strategy? ~ >> no, in my view it's completely consistent with the goal of the green strategy. you'll have to decide for yourself, but i don't believe there's a big difference between bucket 2 and bucket 3 which ed randolph will explain to you, in terms of recognizing renewable energy projects and [speaker not understood] investment. but there is a very big difference between the price of those two products. but the california puc and the california energy commission have both determined that when you purchase a rec whether it's
bundled or unbundled, you're buying the attributes of a renewable resource, which is greenhouse gas free in most instances and -- well, not all in state. some out of state. >> and before you continue, because i'm pretty familiar with this for a long time with a lot of folks in the room. what was the reliance or the mix using renewable energy credits when the discussion was at the board at that time? >> it was -- i believe it was 10% of bundled bucket 1 product, and 85% bucket 2 product, and 5% recs. and at the time i think that bucket 2 product was a lot less expensive than it is today relative to bucket 1. so, because the utilities have commit today a lot more
renewables or a lot of renewables and more than they actually need to comply with state rules, there is -- the price for bucket 1 resources has come down and for recs. >> okay. but if somebody were to say rec renewable energy certificate, if there's one number, what it is today versus what it was when the conversation was at the board and we were last kind of really engaged fully as a commission? >> i'm not sure i understand your question. it was 5% anticipated six months ago, and 75% in what we're proposing today. >> 5% before, 75% today, okay. >> but we're proposing more of the bundled energy product and less of the bucket 2. no bucket 2 product. and some of that also had to do
with the fact that bucket 2, which would have comprised most of the portfolio until recently had some regulatory uncertainty associated with it in terms of carbon cut outses. it's complicated. we were a little nervous about the regulatory risk that went along with purchases of that product. >> yeah. okay. and we do, we are fortunate enough to have the director of the california puc energy division here to maybe answer a couple of questions on that. but you got a couple more slides. >> yeah. >> and unless there's other questions at the conclusion -- >> i'll wait. >> okay. i included in your packet some pictures of some renewable generation that the san francisco puc has already constructed and is managing. just to let you know that, the
san francisco puc is a utility, as i said, it does buy and sell power and it manages a very large hydroelectric system as well as some smaller renewable projects in the city and it's conducted a lot of -- or managed a lot of energy efficiency projects as far as municipal buildings as well. you asked about labor impacts. there's a slide there. just generally, we estimate with the amount of money we would be able to spend in the first couple of years from our revenue stream, we could expect about 75 to 90 job years from buildout and energy efficiency projects. and then there are some, what i would call leveraged effects and labor market street. so, for example, if we spend a million dollars on incentives to induce solar projects, there might actually be $4 million in
investment in solar projects. so, we included the number there to recognize that -- that impact in the labor market of up to about 550 jobs. >> and those are jobs -- if the money to do the work outlined in the draft outline material -- >> yes. >> so, where is the 75 to 90 come from? >> the federal government has estimated that for every million dollars spent on solar energy efficiency, you get 4 to 6 job years. so, that's where we got that. and then we also looked at our own go solar sf projects and looked at the impact of estimates in the community from that program. >> did you count the jobs created through the, at least hopefully anticipated and at this point maybe now finalized and formalized partnership with
sfpuc and department of environment to use our environment now team of community workers to be involved? >> no, in fact that doesn't include those jobs. >> the sfpuc signed the mou with the department of the environment? >> i think we're still working on it, but we have one in concept. i think it's just working out the details, some of the details, yeah. >> commissioner josefowitz. >> i was just going to ask if you, if you sort of thought through some of the incentive programs that would take the money that you're allocating to the local buildout and leverage it up. >> yeah, right now we think what we would like to do is have a feed-in tariff for small projects in the city. so, the increment -- the increment of cost for those projects over our average cost of power, of purchased power,
would come out of the $6 million. we had allocated to us for the program and the $2 million in revenues we expect to get, number one. >> and that would be a feed-in tariff of solar projects or also for co-gen projects or all the other -- >> right now we're thinking solar. solar seems to be the only technology that has been responding to feed-in tariffs in other communities with similar tariff structures that we're considering. so, even if we wanted cogeneration, we don't think we'd get any takers. >> you know what price you were thinking about setting the feeder tariff at? >> new york ~ no, we have someone analyzing that now. we're thinking about having a low price initially, and then if we don't get any interest, we'll increase it incrementally until we get some takers.
as you all know, solar technology, the price of solar technology has come way down in the last two years. we might be able to do some interest at 9 or 10 or 11 cents a kilowatt hour. >> when we look at the jobs, we have a number of speakers that have come here before. so, let me be clear. these jobs created here in the city? >> they would be created, yes, wherever we spent the money. if there was, for example, if the city decided to construct a solar project at sunol -- >> yeah. >> -- could be for city residents. it could be for others. it would depend on how we constructed an rfp. and i'm conscious that there
are city contracting rules that we would have to follow. i've been learning about them in the last few weeks, but there might be some conditions we would put in rfps or feed-in tariffs to encourage local hiring. >> encourage? >> well, for example, one thing we were thinking about is giving sort of extra points for projects that are constructed with local labor. >> oh, okay. >> we didn't forward anything. we're just looking at options like that. >> okay. >> again, i would have to consult with our attorneys about other things we could do. >> all right. you know we have a mandatory local hiring law for the city and county of san francisco, all publicly funded construction, solar energy efficiency. don't even need to look at reinventing the wheel. >> i understand that. i understand that. if we use the feed-in tariff
those wouldn't be public projects. >> and very successful, too. it's increased in the past two years on average employment for san francisco residents on publicly funded construction nearly 70%. that's what we want to do, if anything. not the points and stuff that you get back in the good faith era and all that stuff. it's not good. so, i've been working on this for a long time. >> i understand, sure. >> commissioner josefowitz is on the number deal? >> that's from the last time. >> i know we got more questions. i know we have our guest speaker. was that the end of the presentation? >> yes, unless you have other questions. >> we do. now, here's the trick. we have an expert, we just learned this morning that mr. randolph is the director of the california public utilities commission. the question probably some folks might be out there asking
is what is renewable energy certificate and what does it mean within the mix, its impact on some of this stuff. the good news is we have the opportunity to hear his expertise on this. the trick, we're going to have to work through is the brown act from 1953 technically is an unagendized speaker. i'm sure our director probably told you we have to work through a three-minute presentation to your remarks, but we can ask questions and kind of delve a little more into that mind of yours to help us answer some of these questions. >> okay. thank you very much. >> we may have some questions after. >> i'm aware of the brown act requirement, but i will go quick and skip over a few things and get to the main points in the three minutes. i was asked to come here today to talk about what is a rec. straightforward, a rec is simply a compliance tool. it is an accounting tool that is used to measure the output of a renewable power plant for
compliance purposes. if a windmill produces a megawatt of electricity, a rec is created. that's all it was used for it. it was recreated at the beginning of the renewable programs so state rps's could make sure renewable resource he were counted once and no more than once. and then when folks that wanted to do voluntary compliance such aztar get warning to claim they were 50% renewable, that we actually had a means of verifying those claims. that's all it is on its straightforward simple standpoint. what gets confusing is a rec can come bundled where whoever is purchasing it is purchasing the underlying electricity or unbundled where you're buying the rec and the person who owns the windmill is selling the electricity to somebody else. and they'll typically be sold in the stock market or [speaker not understood]. they'll get the renewable value through the other transaction. and that's all plain and simple. every state in the country that
has an rps uses recs. most states don't care if they're bundled or unbundled. it is purely a regulatory transaction that they're using. the question comes, you know, are unbundled recs, recs that come separate from the electricity good or bad. they're neither good nor bad. all depends what the policy goals are and how the rules are structured. if your policy goals are greenhouse gas reduction and that's it, an unbundled rec from a wind farm in texas is going to lead to the same amount of carbon reduction as an unbundled rec from a wind farm in the delta or solar panel in san francisco. however, if your policy goals include local air issues, local job issues, economic development, then it does start to matter where the rec comes from. again, it doesn't necessarily matter if it's bundled or unbundled, but it does matter
what type of resource it was associated with. that gets you to the california law, which it does apply to any cca that's created up to 33%. from that, the recs, there's three buckets in there, the two most important buckets are bucket 1 and bucket 3. bucket 1 says it has to be an unbundled or a bundled transaction from a facility that can deliver electricity in the california or located in the california. so, no unbundled rec in bucket 1. bucket 3 is unbundled recs and some other things in there, and the percentages that are attached to those over time, most importantly by 2020 no more than 10% of unbundled recs can be in that 33% procurement. however -- >> excuse me. very fascinating. since we're over time, i'd like for him to tell me a little bit more about the rec limit page. could you do that? thank you.
>> maybe why there is a limit, for example. let me go back to this page. the categories, and to clarify again to make the point, this applies, this is state law, it would apply to sf clean energy or clean energy sf. up to the 33% procurement. anything above that is a voluntary procurement. if they say it's coming from a california eligible renewable resource, it could be a rec from that california eligible renewable resource unbundled or bundled. from the puc standpoint we would have to clarify. we would be indifferent as long as up to the 33% statutory standard it was there. the purpose for the three buckets when the legislature was drafting the statute was that the goals of the rps were multi-fold. it was greenhouse gas reduction. it was local air quality. it was job creation, and it was overall fuel diversity in the
electricity portfolio in california. so, the fuel diversity part is to make sure that we aren't the actual electricity coming in to service california, isn't all natural gas or all one resource so there's less chance of market manipulation. that was a lesson from the energy crisis in 2001. local air pollution, again, it matters where the power is coming from. if it's a wind farm in texas and it can't be delivered into california. you still need to have generation in california so it doesn't clean california there. it reduces carbon, but it doesn't eliminate nox or particulate matter. that's how the buckets were set up. however, the reason some bundled recs are allowed and some out of state resources are allowed -- i shouldn't say it's not actually technically out of state. they can't deliver into california. they are allowed. there is some advantage to having some diversity in the
utilities procurement plans. so that a few resources in california can't drive up the price. so, there's some advantages to keeping the overall price of the portfolio lower if you can have some mix in those resources. >> commissioner king, is that from the previous question? >> i guess. >> any other questions from commissioners? >> [speaker not understood]. >> commissioner josefowitz. >> so, the reason that the bucket 3com ~ bucket 3 compliance targets go down, the mentioned the reasons rps exist. which one of those four does that satisfy? [multiple voices] >> they can go high and go down is to satisfy the goal of hopefully keeping the compliance costs of rps relatively low.
to allow in the early year as new generation is being built, to have the utilities have more options in their procurement on where they're buying from. but over time, as resources come online there's less and less need for an unbundled rec in that bucket 3. >> and, so, just so that i understand, there is a greenhouse gas difference between bucket 1, bucket 2 and bucket 3? >> between the buckets there is not necessarily a greenhouse gas difference. there's other environmental differences, but not greenhouse gas. greenhouse gas is a global issue. so, it doesn't really matter where the -- i keep using wind farm. whatever the renewable facility s it doesn't matter where the facility is, as long as it's offsetting fossil fuel generation in that area, you're going to get a greenhouse gas reduction. and because it still has to come from an eligible renewable
resource as we define it, even unbundled rec will offset the need for fossil fuel generation from places. again, it is important how a contract is constructed. there are ways to -- there have been some in the past some utility contracts for recs that were then constructed in a way that it left you scratching your head on whether or not it reduced carbon. but if they're constructed -- >> unbundled recs. actually in that case it was constructed in a way to call it a bundled rec. they were trying to get around the way the law used to be written. there are ways you can do a contract where you scratch your head and say it's done. if the rules are done right and they're monitored right and the people procuring the electricity aren't being cute, it doesn't matter where if it's a bundled rec or unbundled rec for carbon reduction. >> i don't